Financial Management Made Easy: Tools and Services For Online Sellers

Managing your finances can be a nightmare. These tools and services reduce headaches, increase accuracy and help find new opportunities.

Very often, marketplace sellers focus on the more exciting parts of their business, like product sourcing, and shy away from areas that they find boring, or difficult, like managing their finances.

This can be counterproductive, because no matter how you feel about getting your finances in order, it’s a necessary part of running any business. It’s a discipline that sellers need to embrace, and become proficient at, so they really understand the numbers that matter.

You don’t have to spend hours in Excel to keep on top of your record keeping and accounts. There are tools and services specifically made to help manage bookkeeping for ecommerce businesses. These help make the process more efficient, while also minimizing the risk of errors.

There are also tools that produce reports to help you see how your business is doing. It’s easy to lose sight of the bigger picture when you are busy all day dealing with suppliers, listing products and providing customer support. But being able to see how profitable you are, at any time and at any level of detail, is crucial to business success.

Expanding into new product lines, or increasing purchase levels to get better discounts, can also make a big difference to your business. Some sellers choose to take out loans, or use other cash flow solutions, so they can take advantage of new opportunities when they present themselves, or plan for the seasonal ups-and-downs of ecommerce.

In this post I’ll walk you through the Financial Management category of the Web Retailer directory. It covers Cash Flow and Loans, Accounting Connectors, Ecommerce Accounting and Sales Tax and VAT.

What Tools and Services Are Out There?

Cash Flow & Loans

This section of the Web Retailer directory is for services that specialize in providing business loans for online sellers.

There is a common misconception that the time to apply for a loan is if your business is struggling. This is simply not the case, as taking out a loan will only paper over the cracks, and could even cause further harm to your business. In this situation, you need to review the business as a whole, find out what’s not working and change it. Only when you’ve got a consistently solid level of sales should you consider taking out a loan.

This might be because you’ve got a great opportunity to take on a larger amount of stock at a good price, or it could be that your current cash flow is not enough to finance further growth and you need additional funds.

When choosing an ecommerce loan provider, there are a number of factors to consider. First, you need to decide how much you want to borrow, how long you need to repay it and how quickly you want the funds. You then need to find out the interest rate and any fees that each provider will charge, as well as the types of repayment plans that they are offering. Finally, it’s important to assess the impact it might have on your credit rating.

As well as loan providers, this section of the directory is home to Payability. They take a unique approach within the ecommerce industry. Instead of offering loans, they use the practice of “factoring” to give Amazon sellers their sales proceeds quicker. Each day, they look at the sales you made the day before and pay you 80% of that amount straight away. They pay out the remaining 20%, minus their fee, when they receive your payout from Amazon every two weeks.

Accounting Connectors

Bookkeeping is a crucial part of any business, as it allows you to assess profitability, complete statutory accounts and calculate taxes.

For online sellers it can be difficult though, as there is often a high volume of sales from many different channels. Popular accounting tools like QuickBooks and Xero are not built to pull data directly from online marketplaces and shopping carts, so there can be a laborious and error-prone process of data export and import between systems.

Accounting connectors address exactly that problem. They connect directly to sales channels or inventory management tools, and synchronize the transaction data with accounting software. The process is both faster and more accurate than manual data imports. Some of these tools also have reporting features, and can generate a variety of useful reports, and profit and loss statements.

Reporting is really useful, as it allows you to see how your business is doing and help you figure out what changes, if any, need to be made. You may think that your sales are terrible, but actually find out that in some areas you are still doing well. Or you may think that you’re busier than usual, but discover that all your bestselling products have very low profit margins.

The important thing to remember about reports is that they are only as accurate as the data you’re basing them on. So, make sure that your bookkeeping is as accurate and up to date before you draw conclusions about your business.

There are a number of accounting connectors in the Web Retailer directory but if you are already using a multi-channel management tool, it is worth checking first if it has its own accounting integrations.

Ecommerce Accounting

In this section of the Web Retailer directory you will find accountants that specialize in dealing with ecommerce businesses, and who understand how online marketplaces work.

An ecommerce accountancy service can carry out everyday bookkeeping tasks and also more complex functions, like preparing end-of-year statements and tax returns. Accountants may also act in an advisory capacity, on areas like reducing your tax burden, as well as other financial issues with your business.

These services are important because they help sellers with tasks that they are required to complete by law. Sellers, like any other business entity, are required to file yearly reports and tax returns. Failure to comply with either of these accurately and on time can prove costly.

One final thing to keep in mind is that your accountant should be doing the tasks that you can’t do. It makes sense for them to help with your tax returns or yearly statements, but not to put together things like weekly reports which you should be able to generate using an accounting tool.

Sales Tax & VAT

This category of the Web Retailer directory features tools and services that primarily help sellers calculate their U.S. sales tax and European VAT liabilities.

Sales Tax

U.S. sales tax is complicated right from the outset. Firstly, it varies between states and even from city to city. Then there is the complex matter of nexus and the tax liability potentially created by using Amazon FBA or other fulfillment services. The bottom line is that it can very quickly become difficult to know how much you owe and in which states.

Thankfully, there are tools and services to help you deal with sales tax. There are tools that can calculate how much you owe, based on where you are selling from, where you have nexus, and where the buyer is located. There are also professional services in this category, that can help answer your sales tax questions and advise on the implications of various business decisions.

In terms of filing, you can use tools that generate printable returns or even file the returns for you electronically. Using one of these options can make life easier, as the states all have different forms and doing it yourself manually can be time consuming and easy to get wrong.

Whether you’re a seller in the U.S. only selling to U.S. customers, or an overseas seller offering your products in the U.S., you may find it indispensable to get help calculating and paying your sales tax liability.

VAT

VAT is different from sales tax, as there are minimums and thresholds that you have to reach before you become liable. If you’re a UK-based seller and you’re only selling to the UK, then it is pretty straightforward to calculate how much VAT you owe and you probably wouldn’t need to use a special tool.

It becomes more complicated though if you are a seller in the EU selling to other EU countries, or a seller from the outside the EU (including the U.S.) selling into EU countries. In these scenarios, it can be hard to know when you have reached the threshold and what factors you need to consider in order to work this out.

There is a mix of tools and services in this section that can help. There are companies who provide VAT advice, and can tell you when and where you’re liable. They may also provide answers to any queries you may have and file VAT returns for you.

In terms of tools, Cross Border VAT is unique in monitoring your sales in EU countries, so it can let you know when you are about to exceed them, and also reports on sales by country to help calculate VAT when you are over the threshold. Other tools help by automatically generating VAT receipts for buyers.

Browse the directory for tools and services to help you with Sales Tax & VAT including reviews, news, related discussions, compatibility information and pricing.

In Closing

Bookkeeping, accounting and complying with tax laws are elements that marketplace sellers are forced to deal with, both by law and for the overall health of their business – there’s no getting away from it.

So, if you can use tools or services to make these tasks easy, more accurate and more efficient, then you have little to lose by investing in one.

Likewise with sales tax or VAT, don’t be afraid to approach an expert if you’re unsure about your liability as the impact of getting it wrong can be costly.

It is perhaps only the cash flow and loans category that sellers should approach with caution, as loans should be seen as a way to grow your business and not a way to save one that’s struggling.